The nexus between cash flows, earnings, and dividend payout in Pakistan holds paramount importance for investors. It enables them to assess the financial health and stability of companies listed on the Karachi Stock Exchange-100 (KSE-100) Index, make informed investment decisions, and manage risks effectively. Therefore, the current study discusses the importance of dividends in corporate finance and the factors that affect the dividend payouts, particularly in the context of Pakistani listed companies in the Pakistan Stock Exchange (PSX). The contradictory nature of dividends has made it a fundamental issue of corporate finance, which has been studied in relation to a firm’s investment and financing decisions as prime variables. This study has found that earnings per share and free cash flow affect the level of dividends in the surveyed companies, with earnings per share having a positive but insignificant impact on the dividend per share. Profitability has a positive effect on dividend payout; however, there is no significant effect of earnings per share on the dividend. The findings enhance the current body of literature by providing insights into the determinants of dividend payout among the Pakistani listed companies. Furthermore, these findings are valuable for investors decision-makers, and policy makers, which make informed investment decisions. The study also identified problems for management and investors and other researchers who are conducting different studies to assess firm behaviour regarding payout decisions with possible solutions and future implications.

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